Posted tagged ‘Pending Home Sales’

This is good news all around for the housing industry but the most encouraging points have to be the nice increase in new homes followed closely by lower interest rates. For a more detailed look at this subject – please read the article below.

Pending home sales surged in May, spurred by lower interest rates and increased inventory, the National Association of Realtors (NAR) reported Monday.

The group’s Pending Home Sales Index (PHSI), which measures contract signings as an indicator of future sales figures, jumped 6.1 percent month-over-month to 103.9. It was the largest one-month increase since April 2010, when the index spiked 9.6 percent as first-time buyers moved to sign purchase contracts to qualify for the First-Time Homebuyer Tax Credit.

With both new and existing-home sales showing promise in May, the association expects the momentum to continue.

“Sales should exceed an annual pace of five million homes in some of the upcoming months behind favorable mortgage rates, more inventory and improved job creation,” said NAR chief economist Lawrence Yun. “However, second-half sales growth won’t be enough to compensate for the sluggish first quarter and will likely fall below last year’s total.”

All four regions of the country posted increases in pending sales numbers, with the Northeast leading with an 8.8 percent month-over-month gain to an index of 86.3. The Northeast was also the only region where pending sales increased year-over-year, rising 0.2 percent.

In the Midwest, NAR reports pending home sales were up 6.3 percent to an index of 105.4, while pending sales in the West rose 7.6 percent to 95.4. Pending home sales in the South, meanwhile, increased 4.4 percent to 117.0.

A lack of inventory and the tougher requirements for getting a mortgage contribute as much to this drop in the pending sales index as the higher mortgage rates. New housing starts are up and that is reflected in the rise in the new home contracts. Please read the article below.

Continuing to respond to higher mortgage rates, the Pending Home Sales Index (PHSI) slipped for the third straight month, dropping 1.6 percent in August to 107.7 the lowest level since April, the National Association of Realtors which compiles the index reported Thursday. Economists had expected a more modest decline, 1.0 percent, to 108.3. NAR also revised the July index down to 109.4 from the originally reported 109.5.

The index covered the same month in which new home sales, reported Wednesday by the Census Bureau of Department of Housing and Urban Development, improved 7.9 percent. Like the PHSI, new home sales are tracked when buyers sign contracts. The existing home sales report for, also a product of the NAR, is based on closed transactions.

NAR Chief Economist Lawrence Yun said the drop was expected as a consequence of buyers accelerating purchase decisions while mortgage rates were increasing. Indeed, existing home sales jumped in both July and August. The corresponding PHSI rose a sharp 5.8 percent in May – the strongest month-month increase in two years. The index dropped a scant 0.4 percent in June.

Yun downplayed expectations for home sales.

“Moving forward, we expect lower levels of existing-home sales,” he said, “but tight inventory in many markets will continue to push up home prices in the months ahead.”

Existing home sales rose an unexpected 6.5 percent in August to an annual sales rate of 5.48 million, the highest level since February 2007 – ten months before the onset of the Great Recession — the National Association of Realtors reported Thursday. Economists surveyed by Bloomberg expected existing home sales to drop to 5.255 million from July’s originally reported July’s 5.39 million sales pace which was unchanged in today’s report.

The increase in sales came as the median price of an existing single family home in August dipped slightly from July, down $300 to $212,100. It was the second straight month-month price drop.

The inventory of homes for sale edged up to 2.25 million from 2.24 million in July, computing to a 4.9 month supply down from 5.0 in July and the lowest since February’s 4.7 month supply.

The sales increase came as mortgage rates continue to rise with buyers seeking to complete transactions before rates went up further. According to Freddie Mac, the rate for 30-year fixed rate loan in August was 4.46 percent (the average of the weekly rates), up from 4.37 percent in July.

The sales data came shortly after a the Federal Open Market Committee said tighter rates could be hindering the economic recovery and announced it would continue its monetary stimulus policy designed to “maintain downward pressure on longer-term interest rates [and] support mortgage markets.”

The NAR warned the strong sales pace might be a “temporary peak”, the association’s chief economist said “rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead.”

He warned “tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”

It would just make sense that with current low home prices and the housing market showing all the signs of steady growth that rental houses would make a great investment. Please read the article below and let us know what you think.

Single family rentals appear poised to become a significant class of long-term investment asset according to a new report by financial services firm Keefe, Bruyette, and Woods (KBW). The general increase in the rental market brought on by the recession, coupled with elements of recovery such as low inventory and strong re-sales suggest that broad institutional investment in single-family rental properties could emerge as an appealing market.

“While the single-family rental market has historically been fragmented, institutional interest has increased sharply,” said Jade Rahmani, the report’s author and VP of KBW. “The large foreclosure inventory and drop in home prices have created the possibility for institutions to generate attractive cash returns of 5-7 percent and total returns including home price appreciation of over 15 percent annually.”

“We expect the large single-family rental companies to experience growth over the next 12-24 months with [the] introduction of leverage and consolidation of smaller players as potential drivers,” Rahmani continued. “We believe the sector has the potential to emerge as a long-term institutional asset class. We expect ramping lease-up capacity to drive improved occupancy, leading to positive operating income.”

Responding to higher mortgage rates and higher prices, the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) slipped 1.3 percent in July—the steepest decline this year—to 109.5, the group reported Wednesday. Economists had expected the index for July would drop to 109.8, which would have been a 1.0 percent decline from June’s 110.9. The June index was unchanged.

The index covered the same month in which new home sales, reported last week by the Census Bureau and HUD, plunged 13.4 percent to a seasonally adjusted sales pace of 394,000, the lowest rate of the year. Like the PHSI, new home sales are tracked when buyers sign contracts. The existing-home sales report, also a product of NAR, is based on closed transactions.

Although the group downplays monthly price changes when it reports closings, NAR economist Lawrence Yun cited higher prices as affecting new contracts.

“Higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West,” Yun offered as an explanation for the drop in the PHSI.

The Case-Shiller Home Price Indices for June, reported Tuesday, rose 2.2 percent to their highest levels in almost five years.

Increasing rates and prices, though, could also serve as a catalyst for contracts and sales as buyers rush to lock in prices or rates before they go higher.

The drop in the July PHSI was the second monthly decline, the first time the index has fallen for two straight months since last November and December. At 109.5, the index is at its lowest level since April.

Responding to higher mortgage rates, the National Association of Realtors’ (NAR) Pending Home Sales Index (PHSI) slipped 0.4 percent in June to 110.9, the group reported Monday.

Economists had expected the index to drop to 110.7, which would have been a 1.4 percent decline from May’s originally reported 112.3. The May index was revised down to 111.3.

With the revision, the May index, originally reported as the highest in six years, matched the level of April 2010.

The index covered the same month in which new home sales, reported last week by the Census Bureau and HUD, surged to a five year high. New home sales are tracked when buyers sign contracts, just as the pending home sales index is compiled for contracts on existing single-family homes. New home sales rose as prices slipped; prices of existing single-family homes have been increasing even as mortgage rates have also been rising.

Indeed, the higher mortgage rates were seen as one factor in the increase in new home sales as potential purchasers rushed to lock in loans before mortgage rates rose further. That appeared to not be the case with existing homes.

The dip in the June index continued a monthly pattern of alternating increases and decreases in the PHSI, which has increased in odd-numbered months and decreased in even-numbered months since last December, though it also fell in November.

The PHSI is considered an indicator of home sales (closings) reported by the NAR. Existing-home sales fell in June as the PHSI for April dropped. The index rose in March, and home sales increased in May.

Even with the monthly decline, the PHSI was up 10.9 percent over June 2012, the 26th straight month of year-over-year increases. New home sales have been up on a yearly basis for 21 straight months and in 24 of the last 25 months.

The index improved in June in only one of the four Census regions, increasing 3.3 percent in the West to 114.2 on the heels of a 16.8 percent spike in May. The index in the West is up 4.4 percent in the last year.

The index was flat at 87.2 in the Northeast, up 12.2 percent in the last 12 months. The index fell 2.1 percent to 118.3 in the South—up 9.5 percent since June 2012—and dropped 1.0 percent to 114.3 in the Midwest, 19.5 percent ahead of a year ago.

The PHSI is based on a sample of about 20 percent of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, the base year.

The Pending Home Sales Index (PHSI) rose a disappointing 0.3 percent to 106.0 in April, the National Association of Realtors reported Thursday. Economists had expected a 1.4 percent increase to 107.5 from March. The March index was unchanged from the originally reported 105.7.

Last week in a parallel report, the Census Bureau and HUD reported contracts for the sale of new homes increased 2.3 percent to 454,000 in April.

Both the new homes sales and the pending home sales reports measure contract signings and are designed to be forward looking indicators.

With the month-over-month improvement, the PHSI is 10.3 percent above April 2012, the strongest year-over-year gain since October when the PHSI was up 12.1 percent from a year earlier.

The index has improved month-over-month in three of the last four months.

Though designed to be an indicator of future sales-closings, the PHSI does not always line up with the existing-home sales report of completed transactions issued by the NAR.

In March, existing-home sales dropped to 4.94 million from 4.95 million in February even though the PHSI rose in January. Closed transactions rose in both January and February although the pending sales index dropped in November and December.

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